In The News Today

- The Dow Retook Its October 2007 High on March 5th; Gold Was Up by 115% for the Same Period - Trade Deficit Deteriorates Anew - Inflation-Adjusted Construction Spending Shows No Recovery - Structural Consumer Liquidity Issues Continue to Constrain Economic Activity.

Though the world’s second largest economy China grew at its slowest pace in 13 years in 2012, the Spring Festival celebrations by the Asian country showed that citizens were eager to leave it all behind and embark on a massive shopping spree.

As compared to last year, sales of gold bars for investment purposes reported a twofold increase. The decline in gold price on the international market was one of the main factors that triggered brisk sales of gold bars.

Retail sales at outlets monitored by the Ministry of Commerce increased 14.7% during the February 9 to February 15 period this year, as compared to the year ago festival period. Around $86 billion (539 billion yuan) worth of sales took place this year, according to the government.

Sales of gold, silver and jewellery pieces at the monitored establishments increased 38.1%. Though the Ministry did not identify bullion sales in value terms, it said the gold, silver and jewellery market reached a high consumption peak during the period.

In Shanghai particularly, there was brisk buying with sales going up by 10.2%. Good weather encouraged people to go out and spend. Another factor that added to increased sales during the time was Valentine’s Day. Ensuring that shoppers didn’t miss out, many department stores decided to extend their seasonal sales right up to the sixth day of the new year.

Now that the Bears have had their party this is something new they can do. This way they do not stink.

Jim Sinclair’s Commentary

This makes perfect sense when you understand what liquidity does and when it does it. It also underscores gold at $3500 and above.

It is a sad comment on the culture or lack thereof regarding wealth.

Jim Sinclair’s Commentary

The entire Western world, once vocally critical of QE, has now adopted "QE to infinity" with gusto.

There is no way to avoid the consequences of debt monetization. The economic law is an axiom, and the consequences will occur.

Gold will trade at $3500 and above as it exercises it inherent characteristic via Gresham’s law in the BRICs central banks to balance the balance sheet of the most errant deficit.

Options include giving the monetary policy committee greater time to bring inflation back to the 2 per cent target, giving the BoE a Federal Reserve-style dual mandate to target both employment and inflation, and even targeting cash spending in the economy rather than inflation.

Osborne to hand Carney more powers By Chris Giles and George Parker March 6, 2013 9:30 pm

George Osborne’s Budget will pave the way for Mark Carney, incoming Bank of England governor, to come to the rescue of the economy as the chancellor sets the scene for a new era of looser monetary policy.

The chancellor is resisting suggestions by Vince Cable, business secretary, that he should boost growth by relaxing his Plan A with a new programme of spending on schools, roads and housing – funded by extra borrowing.

Instead Mr Osborne will use his Budget on March 20 to reinforce his message of “fiscal conservatism and monetary activism” by clarifying how the government intends to use monetary policy to get the economy growing again.

Treasury officials are discussing proposals to change the remit of the bank to coincide with the arrival of Mr Carney as the governor in July, reflecting frustration at what was seen as previous BoE intransigence.

The government expects the BoE to think afresh about monetary policy under the leadership of the Canadian central banker at a time when Mr Osborne’s fiscal room for manoeuvre is highly constrained.

In the Budget, the chancellor renews the inflation-targeting remit of the BoE and this gives Mr Osborne an opportunity – already sanctioned by Sir Mervyn King, the outgoing governor of the BoE – to review the 2 per cent inflation target and the bank’s operations.